July 12, 2011

Suze Orman Thinks Housing Prices Will Drop 66%

The other day I was watching an episode of Suze Orman.  Suze thinks seems to think that you shouldn't buy a house now cause her opinion is that housing prices are going to go down even more.    In fact she seems to think that its reasonable to expect a home to potentially lose 2/3 of its value.   She gave the example of a home in Tampa, FL that used to cost $750,000 but was now $150,000.    That sounds like a pretty good price right?   Well according to Suze it isn't cause it could go down to $50,000.   Her "logic" was that a neighbor who was desperate to sell might try to sell their house at $100,000.   Then if the house didn't sell right away then they might drop to $50,000.   Presto wammo your house is now lost 67% of its value and is only worth $50,000. 

The whole scenario just doesn't seem realistic at all.   If you were house shopping and looking at homes for $150,000 and you saw an equivalent house at $100,000 then wouldn't you jump at such a bargain price?   On the other hand if you were selling a home why would you discount it 33% right off the bat?   Even worse if your heavily discounted house didn't sell right away then why would you hastily slash the price in half?  I just don't think this scenario is very serious.   I admit its possible that housing prices could drop a lot, but then anything is possible.  

I don't know if Suze really thinks this is how housing market really works or if its just total hyperbole meant to scare everyone away from buying a house.   Honestly it seems like fear mongering to me.   I don't think the housing market is in great shape but I do think we are close to the bottom at this point.   Prices could go down some more but I don't see values going down significantly.

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